[2005] NSWSC 742
Deputy Commissioner of Taxation v Shi (2021) 392 ALR 1
Didisheim v London and Westminster Bank [1900] 2 Ch 15
Independent Trustee Services Ltd v Morris (2010) 79 NSWLR 425
Source
Original judgment source is linked above.
Catchwords
[2005] NSWSC 742
Deputy Commissioner of Taxation v Shi (2021) 392 ALR 1
Didisheim v London and Westminster Bank [1900] 2 Ch 15Independent Trustee Services Ltd v Morris (2010) 79 NSWLR 425
Judgment (3 paragraphs)
[1]
Judgment
HER HONOUR: This is an application by summons filed on 1 September 2021 by the plaintiff, Dr Frank Kebekus, who is the insolvency administrator of the second defendant (Apanage GMBH & Co). The second defendant is a company incorporated in Germany. Dr Kebekus, in his affidavit affirmed 24 August 2021, deposes that the second defendant is a wholly owned subsidiary of the Steilmann Group, an international textile group comprising more than 60 companies across 14 countries.
The second defendant was founded in 1995 in Gelsenkirchen Germany under Articles of Association dated 3 August 1995. Its business activities include trade in clothing, accessories, shoes and related goods and services (see [8] of Dr Kebekus' affidavit). Dr Kebekus was appointed as insolvency administrator of the second defendant by order of the Dortmund Local Court made on 1 June 2016.
Dr Kebekus has deposed that the director of the sole shareholder of the second defendant (Mr Giazzi) had filed an application by letter dated 6 April 2016 for the commencement of insolvency proceedings against the second defendant in the insolvency division of the Dortmund Local Court on the basis that the second defendant was not able to pay its liabilities, including liabilities owed to banks under terminated loan agreements with the Steilmann Group's banks. At that time, the second defendant's liabilities exceeded its assets by an amount of approximately €107 million (see [12] of Dr Kebekus' affidavit).
Dr Kebekus has deposed to the applicable law in respect of insolvency proceedings in Germany, that being the Insolvenzordnung (or Insolvency Statute), s 35(1) of which provides (as translated into English) that "[T]he insolvency proceedings shall involve all of the assets owned by the debtor on the date when the proceedings were opened and those acquired by him during the proceedings (insolvency estate)". Dr Kebekus has also provided a translation of s 80 of the Insolvency Statute which provides that "[u]pon the opening of the insolvency proceedings the debtor's right to manage and transfer the insolvency estate shall be vested in the insolvency administrator". Handed up to me on the present application are copies of the provisions of the Insolvency Statute relied upon (as extracted from the relevant German website).
Dr Kebekus has deposed that, accordingly, his appointment as insolvency administrator, pursuant to the relevant German insolvency laws, means that all the powers of management of the second defendant have been transferred to him.
For completeness, I note that for the purpose of proving the German law the plaintiff relies on s 174 of the Evidence Act 1995 (NSW), which has been interpreted liberally. The plaintiff notes that it has been held to be sufficient to rely on publication of the statutory law via the internet (relying on MindShare Communications Ltd v Orleans Investments Pty Ltd [2000] FCA 521 at [37] per Katz J), and that evidence of the statute appears to be a reliable source of information as confirmed by the High Court in Deputy Commissioner of Taxation v Shi (2021) 392 ALR 1; [2021] HCA 22 per Gordon J with whom the plurality agreed (at [31]).
Dr Kebekus has deposed that, since his appointment as insolvency administrator on 1 June 2016, he has taken a number of steps to locate and realise the assets of the second defendant, both in Germany and internationally, but that payments to insolvency creditors have not yet been made as the insolvency proceedings have not yet concluded. Dr Kebekus estimates that the insolvency proceedings will continue until at least the end of 2022 and has deposed to the foreign matters still to be settled in order to finalise the administration (see [20] of his affidavit).
Dr Kebekus has deposed that his review of the books and records of the second defendant revealed that, as part of its business operations, the second defendant had traded in Australia; and he has annexed to his affidavit a bank audit certificate in relation to the signatories to a bank account set up in Australia for that purpose. Dr Kebekus has deposed (at [24]) that the funds held in the bank account were periodically transferred out of the bank account by the employed staff of the second defendant, up until the date on which the second defendant filed for insolvency.
The bank account is one held by the Commonwealth Bank of Australia, (the first defendant in the present proceedings) which has filed a submitting appearance. The credit balance of this account as at 30 September 2017 was $56,771.93. Exhibited to Dr Kebekus' affidavit are copies of bank statements in respect of the bank account covering the period from 1 January 2017 to 30 September 2017; and it is noted that no transactions are recorded in respect of the account during this time except for minor bank and account fees. The first defendant agreed to place a freeze on the funds held in the bank account and agreed not to allow the authorised operators of the account to deal with the funds in the account, without first providing the plaintiff's solicitors with five business days' notice.
The plaintiff here seeks orders in effect for the transfer of the funds in the CBA bank account to an account in the name of the plaintiff. The plaintiff acknowledges that the plaintiff is not in the present circumstances able to rely on the Foreign Judgments Act 1991 (Cth) nor the common law principles for the enforcement of foreign judgments. However, the plaintiff relies on authority to the effect that Equity will, in appropriate circumstances, enforce a foreign judgment. In particular, the plaintiff relies on a decision of McPherson J in the Supreme Court of Queensland in White v Verkouille [1990] 2 Qd R 191 (White v Verkouille), that being a case in which the plaintiff, as receiver, obtained an order from the District Court of Nevada authorising the plaintiff to take possession of, and receive, certain funds held in an ANZ account in Australia. His Honour ultimately made a declaration that the plaintiff was entitled to receive the moneys (and made consequential orders). Noting that there was no local judgment capable of being enforced, his Honour observed (at 194) that "[e]quity lends its aid to the enforcement of a foreign judgment, without requiring any prerequisite that it be made a judgment of this Court."
His Honour (see from p 194) analysed the relevant authorities in which the equitable jurisdiction had been invoked in aid of foreign judgments or orders appointing receivers and the like, including Didisheim v London and Westminster Bank [1900] 2 Ch 15; Pelegrin v Cootes & Co [1915] 1 Ch 696; Re Young Deceased [1955] SR Qd 254 (Re Young Deceased) and Schemmer v Property Resources Ltd [1975] Ch 273 (at 287).
His Honour in White v Verkouille followed the decision in Re Young Deceased, which, although not binding, his Honour considered to be correctly decided. His Honour said that, on that footing, the Nevada order appointing Mr White as receiver was entitled to recognition and enforcement in the Supreme Court of Queensland. His Honour noted that no attempt had been made to impugn the validity of either the Nevada order of appointment or the judgment for damages that preceded it. (In that case there were, unlike in the present case, contradictors on the application.)
McPherson J's reasoning was approved and adopted in this Court by Bryson AJ in Independent Trustee Services Ltd v Morris (2010) 79 NSWLR 425; [2010] NSWSC 1218 (Independent Trustee Services). There, the applicant was the trustee of an English pension scheme. The trustee had obtained declaratory orders and orders to account on the basis of wilful default from the High Court of England and Wales against the respondent, who was a citizen of the United Kingdom. The respondent had been served in New South Wales where he resided, not having appeared in the English proceedings; and orders were sought in this Court for the taking of an account on the basis of wilful default.
In granting the application, Bryson AJ held that citizenship of a foreign country is a recognised ground of jurisdiction on which the effectiveness of foreign judgments is accepted under the common law (see [24]), and noted that a Court of Equity will lend assistance to the enforcement of a foreign judgment in another Court of Equity without requiring as a prerequisite of enforcement that the foreign order be made a judgment of the Court, provided that there is a sufficient connection between the defendant and the jurisdiction in which the foreign order was made to justify recognition of the foreign Court's order (at [33]). In that case, sufficient connection to justify recognition was said to be due to the fact that the respondent was usually found in New South Wales, where he had been able to conduct a legal business for a limited purpose whilst the substantial merits had been determined in the United Kingdom (a country whose citizenship he claimed, actually had and at times relied on) (see [35]).
It is noted that McPherson J's judgment was also referred to by Campbell J, as his Honour then was, in Davis v Turning Properties Pty Ltd (2005) 222 ALR 676; [2005] NSWSC 742 (see [16]-[18] and [35]).
The plaintiff submits that in the present case the connection between the second defendant and the German Court is readily apparent (the second defendant being a German company founded under Articles of Association in 1995, as I have already noted). As deposed to by Dr Kebekus, since his appointment he has acted to retrieve and realise the assets of the second defendant, both in Germany and internationally, and the retrieval of the funds in the Commonwealth Bank account is one of the matters still outstanding in the administration.
I am satisfied that it is in accordance with the reasoning of McPherson J in White v Verkouille, as approved and endorsed by Bryson AJ in Independent Trustee Services, that this Court should lend its aid to the enforcement of the foreign judgment pursuant to which Dr Kebekus was appointed as insolvency administrator of the second defendant; and I am satisfied that there is a sufficient connection between the second defendant and the jurisdiction in which Dr Kebekus was appointed as insolvency administrator so as to justify the recognition of the order made by the Court in Dortmund.
[2]
Orders
For those reasons I make the declaration and orders sought in the summons as follows:
1. Declare that the plaintiff, as insolvency administrator of the second defendant appointed on 1 June 2016 in proceedings 251 in 41/16 in the Local Court of Dortmund in Germany, is entitled to receive, and to discharge the first defendant for the receipt of, all moneys standing to the credit of the bank account in the name of the second defendant bearing account number 06 2000 15938890 held by the first defendant.
2. Order that the plaintiff, as insolvency administrator, is at liberty to transmit the money referred to in Order 1 out of the jurisdiction of this Court to the credit of an account or accounts in his name within the jurisdiction of the Local Court of Dortmund, Germany.
3. These orders be entered forthwith.
[3]
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Decision last updated: 14 December 2021